I write about the Internet technologies and upstarts that are disrupting advertising and media faster than ever. I'm living this disruption, so I might as well write about it, too. I spent nine years as chief of BusinessWeek's Silicon Valley bureau writing about the leading edge of technology and business, and I continue to do so for a variety of publications. Follow my posts here by clicking the "+ Follow" link under my name. You can also find me at my personal Web site RobHof.com, follow me on Twitter (robhof), Circle me on Google+, subscribe to me on Facebook, and email me (robert.hof@gmail.com).

That’s it. And the high price of that one, half-heartedly tossed out near the end of a long keynote on May 15, drew audible sighs of disappointment from the nearly 6,000 attendees.

The lack of any shiny new gadget stood in stark contrast to the last few years’ conferences. In 2012, for instance, Google gave away a Galaxy Nexus phone, a Nexus 7 tablet, and a Nexus Q media streaming device. Not only that, it debuted Glass, the wearable computer that, while mostly a concept car at the time, has since become one of Google’s next big bets.

The absence of new gear didn’t seem to bother most of the developers. No doubt whatever letdown they felt was more than offset by the gift of a free Chromebook Pixel, the $1,299 high end of Google’s Chrome netbook line.

But they also understand something that people tend to forget about Google, even as they’ve finally accepted the notion of Google producing its own devices: It’s really still a software company, one that provides most of that software as online services. That’s why nearly the entire keynote at I/O was about improved services, from gaming to music to photos to maps and more.

Just a few short years ago when Google first started producing its own phones and computers, many Google watchers and investors wondered if its leaders had lost their minds. Why would a company with those juicy gross margins mess around with low-margin hardware? But they entirely missed the point of what Google was doing. All the hardware it has designed and even sold is in the service of providing more and better access to its services and thus to the advertising that drives nearly all its revenues.

What many people don’t realize about Google is that it has become a master of the nudge. Everything from Android itself (which doesn’t make any money directly) to its Nexus phones and tablets (which are reputed to be doing no better than breakeven), from its 2008 bid for radio spectrum (which it lost, perhaps purposely, to get Verizon and others to buy it and eventually expand wireless Internet access) to its new fiber broadband service in various cities–all those moves were intended to push other developers, hardware partners, carriers, and competitors to improve their offerings. And the better the hardware, software, and Internet access they provide, the better Google’s business does.

Android embraces one of the defining strategies of the MicrosoftMicrosoft-IntelIntel personal computing model, providing a platform on which many other companies can come up with countless variations. Rivals then compete in the market and, at least theoretically, produce faster innovation.

But Google realizes that there’s one additional ingredient necessary to make that model work best: Those companies sometimes need a kick in the butt to up their game. AppleApple‘s incredible success in the second Steve Jobs era starkly exposed that shortcoming of the Wintel model.

It just may be that Google has provided enough kicks for the time being. So the lack of new hardware I/O may simply be a sign that Google’s strategy is working.

For now, anyway. Hardware will remain key for Google. The company like will need to keep coming out with designs that push the envelope with new smartphones, tablets, and computers. Indeed, the resources it’s putting into Glass indicate it’s not even close to finished with using its own hardware designs to push the entire industry forward.

So while Google’s gadgets may have gone missing at this year’s I/O conference, it’s a good bet that Google’s butt-kicking isn’t done, and next year’s swag bag won’t be empty of cool new devices.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Good article! The lack of new shiny hardware is an indication of consolidation and success (specially in the Android world). There is so much room to improve the software experience on already existing devices – and therefore Google is doing the right thing to focus on evolution instead of revolution.

This is true, but certainly not what Google is aiming for. This corporation goes out of its way to associate its name with buzzwords like innovation, but the end result is indeed little more than the “nudge” effect — and IMHO this article is over-generous about the scale and benefits of that.

I think your assumptions are wrong, I believe that Google needed to shift the focus on I/O from last years circus that was aimed more towards getting press and make the conference all about developers again. There was no hardware (s4 is no new hw) but also no new Android release or Chrome OS updates. I bet that Google will soon have a press event (after wwdc) and show of the new Android as well as a updates Nexus line, a media streamer (q2?) and maybe even a smart watch. They don’t want important updates to their own services and APIs to be buried in news about HW.